Thinking of Opening a Restaurant? – The Road to Success Begins with Proper Accounting

The restaurant business in Azerbaijan is one of the fastest-growing and most profitable industries. Just like creating a delicious menu, an attractive interior, and a strong team, choosing the right accounting strategy is a key part of long-term success. Many entrepreneurs focus on kitchen design and marketing, pushing tax planning to the background — which can later lead to major financial losses.

This article explains the available tax regimes, potential risks, and optimal choices for those planning to open a restaurant.

---

Simplified Tax Regime — Ideal for Small and Medium Restaurants

New restaurants in Azerbaijan can opt for a simplified tax regime, which is known for its simplicity and clarity.

Key features:

• Tax rate: 2% of annual turnover

• No additional tax burdens or reporting

• Suitable for basic accounting setups

This regime is ideal for businesses with an annual turnover up to 200,000 AZN. But there’s a catch:

---

What Happens If You Exceed 200,000 AZN?

• You must switch from 2% to 8% tax

• If not reported on time to tax authorities, you will be automatically moved to the standard tax regime

This brings:

• VAT (Value Added Tax): 20%

• Profit Tax: 20%

• Higher accounting and reporting costs

Total tax burden may reach 26–30%, posing a high financial risk if not properly planned.

---

Standard Tax Regime — Best for Large Projects and VAT-based Businesses

Choosing the standard regime may be more advantageous if:

• You represent an international brand or franchise

• You plan large investments in equipment, furniture, or renovations

• You serve corporate clients who can claim VAT

• You plan to operate catering services or export food

A major benefit is VAT refunds, allowing you to reclaim a portion of your investment.

---

Why is Tax Planning Critical When Opening a Restaurant?

Tax planning is not just about paying taxes — it ensures:

• Business compliance

• Cash flow stability

• Flexibility to grow client base and turnover

---

Ideovate Consulting – Your Trusted Restaurant Partner

We at Ideovate Consulting provide comprehensive tax and accounting support for restaurant owners.

Our services include:

• Legal and tax registration for the restaurant

• Analysis and comparison of 2%, 8%, and 18% tax regimes

• Preparation and submission of tax notifications

• Setup and ongoing consultation for accounting systems

• Special VAT-focused support for eligible restaurants